Distressing Signs for Maryland Mall

Since 2009, six of the largest U.S. mall owners have forfeited 20 struggling malls to their lenders or sold them under pressure from those lenders, according to Green Street Advisors Inc.

Lakeforest Mall in Gaithersberg, Md., might soon be added to that list.

Simon Property Group Inc., owner of 337 malls globally, has put the struggling Lakeforest Mall on the block after going delinquent in January on the property’s $137.8 million securitized mortgage.

Simon and its partner, General Motors Asset Management, own the mall’s 402,625 square feet of small-shop space but not its four anchor stores. The mall’s mortgage came due last July, but the Simon partnership opted against using the one-year extension option it had available to it, according to real-estate research company Morningstar Inc.

A Simon representative declined to comment on why Lakeforest Mall is listed for sale. Eastdil Secured has the listing. However, Morningstar notes that the mall was appraised for $120 million last July, which is less than its mortgage amount.

Simon and the special servicer handling the mortgage, C-III Capital Asset Management, are negotiating a pact for C-III to abstain from foreclosing while Simon tries to sell the mall, according to Morningstar.

Lakeforest Mall, built in 1978, posted occupancy of 84.5% in 2010, the latest year for which data is available. Green Street estimates the mall’s annual sales per square foot at $340, just short of the industry average. The Simon partnership bought the mall in 2007.

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